How Is Medicare’s Bundled Payments for Chronic Medical Conditions Working?


Medicare is testing new ways to encourage providers to keep down costs, improve quality of care, and increase accountability. One program, the Bundled Payments for Care Improvement (BPCI) initiative, pays participating hospitals not for each service they provide to a patient but for the entire “bundle” of services included in an episode of care – whether it’s a surgical procedure or hospital treatment for a chronic medical condition.

While bundled payments applied to surgical procedures have yielded promising results, a new Commonwealth Fund–supported study led by Karen E. Joynt Maddox, M.D., of the Washington University School of Medicine indicates that they so far don’t appear to be producing comparable benefits for chronic medical conditions such as heart disease. Findings show no significant difference between participating and nonparticipating hospitals on a range of measures.

According to the authors, hospitals receiving bundled payment for chronic medical conditions may not have had sufficient ability to influence the care that skilled-nursing and rehabilitation facilities provided to patients after their hospital stay. They note that as partnerships between hospitals and postacute care providers become more common, bundled payment could lead to better results over time for beneficiaries with chronic conditions.

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